Climate finance wilkinson (cpi)replicating&scaling up cf-ccxg gf-march2014
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BRAZILCHINAEUROPEINDIAINDONESIAUNITED STATES
+39 041 2700 426Island of San Giorgio Maggiore 830126 VeniceItalyclimatepolicyinitiative.org
Replicating and Scaling-up Climate Finance
Lessons from the San Giorgio Group
OECD, Paris 18-19 March 2014Jane Wilkinson
Director
An Overview of CPI Work 2
San Giorgio Group
2
• Core framing inquires– What is the role and reasons for public finance?
– What are the best delivery mechanisms for public monies?
– How can international and national public investment flows be aligned with each other and with private investments?
– How do we ensure learning?
The San Giorgio Group assembles financial intermediaries and institutions actively engaged in green, low-emission climate
resilient finance
An Overview of CPI Work 3
Case studies: analytical framework
• Complex interactions between all stakeholders
• Investment, returns and profitability
• Risk allocationarrangements
An Overview of CPI Work 4
SGG case studies overview
EIBmultiple
EE
PPCRNepal
Adaptation
KFCPIndone
siaFores
try
Non-renewables
World Bank Risk
Instruments
First-loss Protection
Mechanisms
Risk Mitigation Instrument
s
Policy Risk
Instruments
Instruments
Renewables
time
mark
et
dep
loym
en
t
RD&D Deployment & Diffusion
Commercial
maturity
Montalto di Castro
ItalySolar PV
WalneyUKOffshore wind
JädraåsSwedenOnshore wind
ProsolTunisiaSWH
OuarzazateMoroccoCSP
CIFs+multipleCSP
An Overview of CPI Work 5
Prosol Tunisia Small-Scale Renewables
Goal• To accelerate the penetration of Solar Water
Heaters in the residential sector by engaging local commercial banks
Challenges
• High up-front cost Lack of consumer financing
• Distorting subsidies Perverse policy incentives
• Knowledge gaps Risk aversion
Measures
USD million 60 0.224.0
Investment Subsidy
Capacity and Awareness-
building
Credit Mechanism
An Overview of CPI Work 6
Ouarzazate I CSP Morocco
Goal• To develop a large scale Concentrated Solar Power plant
that can pave the way for a portfolio of CSP in Morocco and the region
Challenges• Early development stage tech Viability gap• High capital cost Lack of
commercial finance• Multiple partners Cooperation &
coordinationFinancing
GoM– MASEN- Grant $ 126- Equity $ 40
- Subsidy $280
CTF (WB/AfDB)- Loan $197
IFIs (AfDB,ADB,EIB,KFW/BMZ/BMU,
EC)- Loans $639- Grants $56
Private Developer- Equity $120
% of Project cost:
30% 13.5%47.5% 9%
An Overview of CPI Work 7
Indonesia KFCP Peat Forest Rehabilitation
Goal• To demonstrate a credible, equitable and effective
approach to rehabilitating peat forests that couldinform efforts in other locations and geographies.
Challenges• Technical and scientific feasibility questionable, little know-
how Test technical approaches and scientific methods
• Potential conflict with local communities Construction, operation phase, permanence
• Policy and legislative uncertainty Overcome poor zoning, contested land tenure, unclear
approval processes
An Overview of CPI Work 8
Nepal - PPCREngaging the Private Sector in Climate Resilience
Goals• To tackle farmers’ barriers to climate resilience by
engaging private agribusinesses to train farmers on climate resilient agricultural practices
• To build models for making climate resilience a long-term business
Challenges
• Awareness and know-howDevelop tailored capacity building measures, leveraging
companies’ networks and incentives to train farmers in their supply chains
• Access to climate-adaptive agricultural inputs and equipment Facilitate market entry to equipment provider
• Lack of access to financeBuy down banks’ risks with innovative risk-sharing mechanisms
An Overview of CPI Work 9
How to scale up green finance?
• Develop well-articulated domestic enabling environments to encourage further private investment.
• Continue to invest in, and ensure effective use of, international public finance, which play a critical role in facilitating low-carbon and climate-resilient investments (consider specific context!)
• Provide new and improved mechanisms to address risks, e.g. policy risk insurance and first loss mechanisms Viabilit
y
Know-ledge
Reduced
Risk
Enabling Environment
Public finance
Risk mitgation
BRAZILCHINAEUROPEINDIAINDONESIAUNITED STATES
+39 041 2700 426Island of San Giorgio Maggiore 830126 VeniceItalyclimatepolicyinitiative.org
…helping nations spend their money wisely